Open Governance

The world is changing rapidly in two directions: the exponential rate of advancement of technology (digital, biological, and materials); and the shifts in stakeholder expectations (environmental, social, and governance – “ESG”) that we believe constitute a cultural step-change. (For our clients in Vietnam, these are even faster than anywhere else). The world has become volatile, uncertain, complicated, and ambiguous. As a consequence, conventional ways of working and managing which have been successful for us until now will no longer succeed in the future. Most organisations are already feeling this – they are having to adopt new ways of working such as Agile, and introduce new values around ESG, just to survive in the modern world. These “whitewater times” are not temporary: so many things are disrupting that we can expect the VUCA state to continue for the foreseeable future, for decades, perhaps for generations.

This is not news any more. The world is scrambling to adapt. There are many aspects of work changing rapidly at once. We sum them up as Open, or – in more detail in the organisational context – as Human Systems Adaptability.

The key to advancing work is the manager. We must open up management to be invitational, inclusive, serving, and transparent. Better ways of managing enable better ways of working. For managers to manage in new ways, we must change how executives manage the managers and how governors direct the executives and management. We need Open Governance.

What is Governance?

“…regulate proceedings of (corporation etc.)”
Concise Oxford Dictionary (Sixth Edition 1976)

“Ensures that stakeholder needs, conditions and options are evaluated to determine balanced, agreed-on enterprise objectives to be achieved; setting direction through prioritisation and decision making; and monitoring performance and compliance against agreed-on direction and objectives.”
COBIT 5

“Ensures that policies and strategy are
actually implemented, and that required
processes are correctly followed.
Governance includes defining roles and
responsibilities, measuring and reporting, and
taking actions to resolve any issues
identified.”
ITIL 2011 Glossary

“The rules, policies and processes and …laws by which businesses are operated, regulated and controlled…often defined by a board of directors or shareholders, or the constitution of the organisation…”
ITIL 2011 Service Strategy 5.1.1

“…making sure that management does its job properly.”
Unidentified Chairman quoted by Mark Toomey in Waltzing With the Elephant

“The system by which organisations are directed and controlled.”
ISO38500

ISO38500 also defines the three activities of governance: direct, monitor, and evaluate. We define the three main targets for each of these activities:

Direct

Goals
Policies
Decisions

Monitor

Performance
Conformance
Risk

Evaluate

Strategy
Situation
Escalations

The Direct-Monitor-Evaluate activities of Governance are analogous to the Plan-Do-Check-Act activities of Management, although PDCA is a cycle and DME isn’t. (We change PDCA to the clearer and more technically correct Plan-Do-Study-Adjust).

The Executive

It is useful to be clear between Governance, (which Directs. Monitors and Evaluates from outside the operations of the organisation), and the people within the organisation who fulfil the requirements of that governance. This is the executive management group – the representatives of the governors and owners – who deliver direction, perform monitoring, and choose what to escalate. The governors delegate to management to execute governance within the organisation:

expand and build on directives
collect and aggregate monitoring
present artefacts for evaluation

It is this Governance Fulfillment within executive and other management who do:

Policy enforcement: The operational activity of keeping the organisation within the bounds is management not governance.
Strategy: Governors appoint an executive to do this.
Portfolio: Governors appoint an executive to do this too.
Financial control: Governance sets financial policy. Financial management executes it.
Optimisation: Management is responsible for optimising the performance of the organisation. Governance is responsible only for setting, and ensuring it remains within, bounds.
Measurement, reporting and audit, and the tools, are not governance.

For managers to manage in new ways, we must change how executives manage the managers and how governors direct, monitor, and evaluate the executives and management. We need Open Governance. What does this look like?

None of the governance activity or targets change.

The content changes, influenced by Open principles: